Cattlemen support waiver of RFS mandate

In comments filed today with the Environmental Protection Agency (EPA), the National Cattlemen's Beef Association (NCBA) is supporting a petition filed by the State of Texas to reduce federal mandates for production of grain-based fuels. The petition requests that EPA use its statutory authority to reduce the Renewable Fuels Standard (RFS) mandate for 2008 by 50 percent – trimming the mandate to 4.5 billion gallons of feedgrain-based ethanol, from the current 9 billion gallons. This mandate is scheduled to expand to 15 billion gallons by 2015.

"NCBA does not believe that issuing a partial waiver of the Renewable Fuels Standard will immediately reverse commodity price escalation, nor do cattle producers claim that it will single-handedly address the difficult marketing environment that currently exists for our industry,” says NCBA Chief Executive Officer Terry Stokes in his comments. "But, the RFS is clearly one factor contributing to higher feed prices.”

NCBA notes that 25 percent of 2007's record corn crop was processed to produce ethanol. That percentage will likely be much higher this year, as corn acres have been reduced and spring crop progress has been extremely slow. Grain harvest projections recently received another major setback as a result of catastrophic flooding in critical areas of the Corn Belt.

"Corn growers responded to increased demand last year by producing a record harvest. However, the cattle industry does not operate in the past,” Stokes states. "Both the marketplace and Mother Nature have created a drastically different scenario this year. Lower acreage and below trend line yields can only mean one thing: less corn.”

As one of the criteria for granting a waiver, EPA must consider the issue of economic harm caused by the RFS. In its comments, NCBA emphasizes that ethanol production mandates driven by the RFS are not only creating hardship for livestock producers, but for other industries and consumers as well.

"As corn and other grain prices continue to rise, buoyed by the RFS, the national economy is severely harmed, causing substantial losses in many industries and contributing to food price inflation and overall higher inflation rates. Next year's higher mandate will bring about even greater economic harm as the beef industry begins to contact and retail prices rise substantially as a result.”

While NCBA policy supports the development of alternative energy sources and the nation's overall goal of energy independence, cattlemen want to see a greater emphasis on fuels produced from cellulosic or non-feedgrain sources. NCBA maintains that until grain-based ethanol production operates in a climate that is less driven by federal mandates and government subsidies, the nation will continue to see extremely slow development of additional alternative fuel sources.

"By granting this waiver, EPA would accelerate the development of advanced biofuels that do not rely on food or feed as a feedstock,” Stokes says. "Unfortunately, the mandate for corn-based ethanol is and will continue to send a market signal to construct more conventional ethanol facilities, instead of the next generation of biofuels plants.”